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Insurer Rebuked and Fined for Response Failure

Insurer Rebuked and Fined for Response Failure

In a significant development, an Australian insurance company faced repercussions following complaints about its claims process.
After a meticulous review by the Australian Financial Complaints Authority (AFCA), the insurance firm was directed to extend a formal apology and compensate the aggrieved party.

Originating in early 2022, a body corporate registered a claim with Chubb for flood damage impacting numerous units. Despite providing all the required information to process their claim, the organization faced roadblocks, undergoing prolonged delays with their insurer.

The body corporate expressed it was compelled to initiate repetitive communication with both Chubb and their broker, seeking updates that were seldom coherently delivered. This spurring of constant follow-up encountered the pressing need to lodge an official complaint with AFCA.

Documents released by AFCA indicate that the authority reached out to the insurer multiple times from May to August of 2022, seeking an exhaustive response along with supplementary details pertaining to the claim without avail. Chubb's communication last came in November 2022, redirecting the blame to the claimant's broker.

Upon evaluating the case, AFCA conceded that the broker's client communication was under par. However, it warranted clear that shift in accountability does not rid Chubb of its duty to assure claim advancement without unnecessary stalls. A separate grievance was also lodged against the body corporate's broker for their role in the delay.

AFCA's narrative on the matter spelled out that constant, often unrewarded, efforts were made by the claimant to secure updates from both Chubb and the broker. It was a clear expectation of AFCA that the insurer was primarily liable to administer the claim to fruition in a responsive manner.

AFCA specified that several opportunities were readily available for Chubb to address the complaints lodged about the administration of the claim, opportunities that were unheeded. In light of such inaction and neglect from Chubb, AFCA was aptly positioned to conclude the verdict on the substance provided before them.

The conclusion of the reports prompted a strict mandate; Chubb was obliged to compensate the body corporate to the sum of $3000. This fine was instituted in recognition of the exceptional magnitude of disruption, angst, and vexation inflicted on the claimant through Chubb's neglect to update on the claim's progress and its unresponsiveness towards the concerns raised.

Published:Monday, 12th Feb 2024
Source: Paige Estritori

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